Canada Health Transfer

Unlike Equalization payments, which are unconditional, the CHT is a block transfer; the funds must be used by provinces and territories for the purposes of "maintaining the national criteria" for publicly provided health care in Canada (as set out in the Canada Health Act).

The CHT is made up of a cash transfer. In 2008-09, CHT cash transfer payments from the federal government to the provinces and territories were $22.6 billion and tax point transfers were worth $13.9 billion. The cash transfer is expected to grow to 28.6 billion in 2012-2013, a growth rate of approximately six per cent.[1] Annual cash levels are set in legislation up to the 2013-14 fiscal year as a result of the September 2004 Health Accord between the federal government and the provinces/territories.[2]

While the CHT is allocated on an equal per capita basis, the CHT cash component is not because it takes into account the value of provincial/territorial tax points. The value of a tax point represents the amount of revenue that is generated by one percentage point of a particular tax (in the case of the CHT and the CST, the personal income tax or the corporate income tax). Since provinces do not have identical economies and, therefore, have unequal capacity to raise tax revenues, a tax point is worth more in a wealthy province than in a poorer province.

Currently Alberta and Ontario, the two provinces with the highest revenue raising ability, receive lower per capita CHT cash payments than the other provinces.

However, beginning in 2014-15, the Canada Health Transfer allocation to provinces will be determined solely on an equal per capita cash basis and no longer include tax point transfers. According to economist Livio Di Matteo, this will result in 'a particularly large windfall to Alberta.'[3]

The CHT, which is set to top $36-billion in 2016-17, is now divided among the provinces on a purely per-capita basis.[4]

The Canada Health Transfer was created by the 2003 First Ministers Health Accord signed by the provincial premiers and Jean Chrétien, prime minister of Canada at the time. The accord, signed on 3 February 2003, is a compromise between the two levels of governments, as the provincial premiers did not obtain a federal contribution as large as suggested in the Romanow Report. Jean Chrétien left satisfied from the meeting, talking of a deal on a fundamental reform whereas the provincial premiers showed disappointment. The Premier of Quebec, Bernard Landry even mentioned that the deal was an example of predatory federalism.[5]

These difficult negotiations were held in a context of controversy over the existence of a fiscal imbalance between the federal government and the provinces. The 2003 Health Accord introduced several measures to improve the healthcare system in Canada, notably introducing the Canada Heath Transfer starting on 1 April 2004 to increase transparency and accountability on the use of federal transfers.[6]

Little over a year thereafter on 15 September 2004 another accord on healthcare was signed during a First Ministers Conference. This 10-year plan outlined $18 billions in increased transfers to the provinces over 6 years, notably through increases in the Canada Health Transfer :[7][8]

• The CHT was to be increased by $3 billions in 2004-05 and $2 billions in 2005-06 ;
• A new CHT base set at $19 billions starting in 2005-06, greater than suggested in the Romanow Report ;
• An escalation factor set at 6% starting in 2006-07.

• Indian Health Transfer Policy (Canada)
• Canada Health Act
• Canada Health and Social Transfer
• Health care in Canada
• Canada's Health Care providers, 2007
• Canadian Institute for Health Information
• Canadian and American health care systems compared
• Medicare (Canada)

• Department of Finance Canada - Description of Canada Health Transfer program